The Illusion of Control: Challenging Assumptions

Examining a key decision-making bias

Happy Tuesday, Transformation Friends. Another week, another opportunity to go Beyond the Status Quo.

This week, we’re continuing our look at the cognitive biases affecting our transformation efforts. Today, we’re looking at a bias called the illusion of control. I've created a collection if you’re interested in reading more about the other cognitive biases we’ve explored.

The illusion of control is a cognitive bias where individuals and organizations harbour a belief in their ability to sway outcomes, even in inherently uncontrollable situations.

Brian Quinn, a long-time academic in this space, famously said this about corporate planning (Mintzberg, 1994),

A good deal of corporate planning I have observed is like a ritual rain dance; it has no effect on the weather that follows, but those who engage in it think it does. Moreover, it seems to me that much of the advice and instruction related to corporate planning is directed at improving dance, not the weather. (p. 139)

Here, Quinn is making a cheeky statement about corporate planning. He’s observed that most corporate planning activities have as much influence on actual outcomes as a rain dance has on the weather. Yet, much like the dancers, leaders often believe they’re making a significant impact through these planning exercises. He also notes that when we look to improve, we look at how to make a better dance rather than how to be better at predicting the weather.

Quinn is highlighting how, sometimes in organizations, there’s more focus on the show of planning rather than on making real, effective changes.

This example nicely illustrates the illusion of control. Today, we’ll look at this bias, explore its impacts on decision-making, and examine a few mitigation strategies in our environments.

Grab your morning coffee, and let’s get started.

The Illusion of Control

Let’s start with a formal definition. In his early work on the subject, Langer (1975) defines it as,

an expectancy of personal success probability inappropriately higher than the objective probability would warrant.

In simple terms, the illusion of control is when someone thinks they have more control over a situation than they actually do. It can make us too confident, causing us to ignore information and make poor decisions.

Langer (1975) also discussed psychological factors that contribute to this bias:

• People have difficulty distinguishing between skill and chance and believe they have control over random events.

• People also tend to see connections or causes where there aren’t any: “I did this, and that happened, so I must have caused it.”

Going back to Quinn’s comment, the illusion of control often manifests through confusing activity with results. For example, a misconception might be that we control the outcomes of something by preparing reports and conducting analyses.

The illusion of control doesn’t only apply to individuals; organizations fall victim to it too (Durand, 2003). Organizational hubris may lead us to put more value on following a process than the results and outcomes of that process. You may have worked in environments that embody a “box-ticking” culture: did the thing equals success. That’s the illusion of control at play.

Langer (1975) also explored factors that that reinforce the illusion of control:

Familiarity and Choice

We tend to feel more confident in familiar situations or when given choices, reinforcing the illusion of control.

For example, if we lean toward strategies or decisions we’ve used before, we believe we can predict or control the outcomes based on our past experiences. This could limit innovation or our desire to explore new, potentially more effective strategies. It also influences us to ignore regression to the mean.

Perception of Competence

In competitive scenarios, how we view perceived opponents can shape our confidence and what we expect from our performance, reinforcing the illusion of control.

For example, if we underestimate a competitor due to a skewed perception of their competence, we might make overly ambitious or risky decisions, thinking we have an upper hand when we might not.

Chance, luck, and skill

The illusion of control is especially strong when luck plays a significant role. Take lotteries or games of chance, for instance. People often feel they can influence the outcome, especially if an element of skill is involved (I’m looking at you, carnival games).

For example, we might overestimate our ability to influence outcomes in highly volatile, uncertain, complex, or ambiguous (VUCA) environments, thinking our skills or strategies can overcome external uncertainties. This could lead to overconfidence in conditions where external factors beyond our control largely determine success, causing us to ignore risks or to be ineffective at managing them.

Impacts of the illusion of control

The illusion of control significantly impacts strategic planning and decision-making, affecting our ability to assess resources and competition accurately. (Durand, 2003).

Here are some examples:

1. Overconfidence: The illusion of control can lead to overconfidence in one’s abilities and strategies. Overconfident individuals or organizations might take on more risk than they can handle, assuming they can manage it effectively, which can lead to strategic blunders and financial losses.

1. Underestimation of Risk: Believing they have more control than they do, decision-makers might underestimate the risk associated with a particular strategy or decision. This could lead to insufficient contingency planning and a lack of preparedness for unexpected challenges or setbacks.

2. Inadequate Resource Allocation: The illusion of control may lead to the belief that fewer resources (time, money, personnel) are needed to achieve a particular goal or manage a project, resulting in under-resourcing and potential failure.

3. Resistance to Feedback and Learning: Individuals experiencing the illusion of control may be less likely to seek or heed feedback, believing they already have all the answers. This can inhibit learning and adaptability, which are crucial for strategic planning and decision-making.

4. Failure to Adapt: A belief in one’s control over external events can impede the ability to adapt to changing circumstances. Organizations and individuals may stick to an established strategy or plan, even when evidence suggests it’s not working because they believe they can control the outcome.

5. Escalation of Commitment: The illusion of control can contribute to an escalation of commitment to a failing course of action, as decision-makers continue to invest resources in the belief that they can turn the situation around through sheer will or effort.

How we can mitigate this bias

Research shows us that there are two effective strategies to counteract the illusion of control:

Harnessing Cognitive Diversity

The illusion of control bias and cognitive diversity have an inverse relationship, with high cognitive diversity significantly reducing the illusion of control. This diversity fosters creativity and broadens perspectives, improving strategic decisions (Miller, Burke, & Glick, 1998; Meissner & Wulf, 2017; Shin, Kim, Lee, & Bian, 2012).

Cognitive diversity refers to including people with different ways of thinking, different viewpoints, and different skill sets in a team or decision-making group. This diversity shouldn’t stop with demographic differences but also include varied experiences, educational backgrounds, and problem-solving approaches.

For instance, a multidisciplinary project team allows each member to bring a unique perspective. When faced with a challenge, a marketing expert might approach it based on customer feedback, a finance expert might look at cost implications, an operations expert might consider logistical aspects, and an IT expert might focus on technological solutions. This collective approach ensures a holistic view of challenges and more innovative solutions.

However, an organization needs to understand and appreciate the added value diversity brings and ensure that hiring and retention practices support this need.

Scenario Planning and Cognitive Mapping

Scenario planning and cognitive mapping are essential tools for decision-makers. They counter biases, enhance decision quality, and introduce diverse perspectives to decision-making (Meissner & Wulf, 2017).

Scenario planning is a strategic approach to explore various possibilities and prepare for the unknown. It involves creating detailed descriptions of future events to anticipate challenges and opportunities. For example, an organization might use scenario planning to explore the potential impacts of a new technology on users, considering both the best-case and worst-case scenarios.

Cognitive mapping is a technique to visualize and explore the mental models and beliefs that influence decision-making by creating a visual representation of thought processes. It might be used to understand the perceptions and beliefs of stakeholders about a particular issue or strategy. For instance, before launching a new service, an organization might use cognitive mapping to collect insights about people’s reactions, identifying perceived opportunities and barriers.

Wrap up

With its subtle influences, the illusion of control can sometimes lead us awry. But with awareness, the right tools, and a diverse team, we can counteract this bias and make more informed, strategic decisions. We can shift what we value from the process to the results.

Less dancing and more change.

As we end today, let’s reflect on these questions:

1. In what areas of your work do you feel most in control? Are these feelings based on genuine influence, or could the illusion of control be at play?

2. How diverse is your decision-making team? Are there voices or perspectives you might be missing that could provide valuable insights?

3. Have you or your organization used tools like scenario planning or cognitive mapping? If so, how did it go?

Until next time, stay curious and I’ll see you Beyond the Status Quo.

References

Durand, R. (2003). Predicting a firm’s forecasting ability: the roles of organizational illusion of control and organizational attention. Strategic Management Journal, 24(9), 821–838. doi:10.1002/smj.339

Langer, E. J. (1975). The illusion of control. Journal of personality and social psychology, 32(2), 311.

Meissner, P., & Wulf, T. (2017). The effect of cognitive diversity on the illusion of control bias in strategic decisions: An experimental investigation. European Management Journal, 35(4), 430–439. doi:10.1016/j.emj.2016.12.004

Miller, C. C., Burke, L. M., & Glick, W. H. (1998). Cognitive diversity among upper‐echelon executives: implications for strategic decision processes. Strategic management journal, 19(1), 39-58.

Mintzberg, H. (2000). The rise and fall of strategic planning. Pearson Education.

Shin, S. J., Kim, T. Y., Lee, J. Y., & Bian, L. (2012). Cognitive team diversity and individual team member creativity: A cross-level interaction. Academy of management journal, 55(1), 197-212.